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Leg 8. From Itajaí to Newport (I). Corporate Strategy, the art of decision making.

From Itajaí to Newport. “Corporate Strategy, the domain selection of the business ocean”.Underwater-Light-2

Good afternoon to all of you. I hope you enjoyed the departure of us from Itajaí. We are now sailing at velocities between 10 to 11 knots. It is a mild velocity, and all of us are searching for better positions of wind. Some hours ago, all of us were “battling to get east as quickly as possible so we could hook into the stronger breeze that will fire us” up north again. At this specific moment Team MAPFRE  is leading again, and let´s see how the weather will move us during the following days. This is a recap of yesterday´s action when leaving Itajaí (from the VOR website):

Let´s start: Since Corporate Strategy is the art of decision making to find the business we wish to work in, we can´t continue this leg, without writing about decision making. I took a beautiful course at Cornell, with Professor Jay Russo. He teaches “Managerial Decision Making” at the Cornell SC Johnson College of Business. This course was awesome. Professor Russo mixed his funny and ironic speech and he always taught us to think. This course inspired me to share some of his concepts today. Let´s go to the basics: Let me ask you the following question: How do you decide? Not in terms of the business-management situations, but personally; How do you decide?

effective decision making

The majority of methodologies for decision making have these common steps. Source: Dartmouth College.

To the last question, probably some of you have thought of replying: “I follow my heart”. Others will reply: “I do a pros-cons analysis, and then I decide on the best alternative option”. Probably I will find a digital savvy who will tell me “I do a research on social media data, gather the best alternative options and I have an application which facilitates my multiple scenario analysis”. It may be possible another one will reply to me “I follow the crowds”. And on and on, if we continue asking this question, we will get different answers. Why? because all of us have a particular methodology of decision making for our personal life. That is because all of us are different individuals with different mental models and thinking frames.

At the corporate board level, each of us will not lose our own self. We will continue having our own temperament, peculiar history, personality, mindsets and thinking frameworks. In consequence, once we belong to a Board of Directors team, we will not lose our own self. We will continue being ourselves, but we will decide for a company´s purpose.

delegating desicion makingThe art of doing corporate strategy is inherent to “decision making”. We belong to a Board of Directors simply because we have to make choices, we have to decide which businesses or business do we want to pursue. And this decision-making process only happens because we have “mental models”. A mental model is a representation of all the things we know in some area of domain. “It is knowledge structure, created over time that links the separate elements of our life into a whole”. Each human being has a different mental model. It is unique.  No person on earth has your same mental models, not even in your own family. Not even twins have the same mental models. How each of us interprets and view the world is different, and it depends on multiple variables: our background, our career, our history, the number of years we studied, our nationality, our family and social environment, and many more. life-is-a-balanceThat is why is so important to have leaders of different types of mental models when doing decision-making. It is crucial for the benefit of our societies. If our group of corporate frame minds is only technocrat, our solutions will not be holistic. If our corporate people is only techie-savvy, our solutions will be biased and not integral. If our corporate people is only artistic or a bunch of designers, our businesses will be imbalanced too. Each of us has been built over time with a different mental model for one reason: to contribute to the balance and equilibrium of our businesses and societies. We all are valuable in corporate decision making

Moreover: We can´t understand what is the meaning of awe in relation to vastness and accommodation or leaving our comfort zone if we don´t understand our mental structures and mental models. I invite you to read the following slides to get an idea of what is this all about:

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Click here to see today´s slides in PDF format: Eliescalante Leg 8 Corporate Strategy the Domain Selection II 23042018.

mental models.jpgMental models arrange elements of reality from central to peripheral, and as such organize and clarify our thinking. Mental models also limit our perception. They not only connect elements, they filter out others. They simplify the world to make it more coherent. For better or for worse, they affect what we do, what we see, what we decide, what we don´t see, how we interpret facts, how we explain ourselves to others, how we understand what they tell us, which actions we choose to take and what standards of performance we set” (Russo, Schoemaker 1994).

There are several methodologies used in corporate decision making. It is not my aim to show you how to use them, in this section of my blog, because any methodology for decision making, is just a method, a procedure. The content of our decisions is more important than the methodology used.  We can apply the most modern methodology with excellence, but if the content of our decisions is wrong,  or if our mental models are limited, our value propositions will fail, no matter how much time, efforts or resources we will invest. Little we will evolve in life with our businesses choices if we don´t understand our mental models used for decision making.

Tomorrow we will sail into what I promised yesterday: the two aspects of awe (vastness and accommodation-leaving our comfort zone), and before leaving this blog today, my reflection for all of us is: Can we ask ourselves: what is our mental model for decision making?

Thank you! See you in my next post.

thank you coffee.gif

Thank you!

Inspiration Source References:

Disclaimer: All the presentation slides shown on this blog are prepared by Eleonora Escalante MBA-MEng. Nevertheless, all the pictures or videos shown on this blog are not mine.  I do not own any of the lovely photos or images posted unless otherwise stated.

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